The U.S. Department of Energy (DOE) has launched a major effort to ensure the U.S. has a reliable supply of rare-earth materials, which are used in a number of clean energy applications, including permanent magnet direct-drive wind turbines.

Under the new initiative, which the DOE calls the "Critical Materials Hub," the department will invest up to $120 million over five years to not only ensure access to these materials, but also develop alternatives that reduce the amount of rare earths needed.

China provides 94% of the world's rare earths, including neodymium and dysprosium, which are used in the magnets for direct-drive wind turbine motors.

Some companies in the wind energy supply chain are already preparing for this reality. Last September, permanent-magnet generator manufacturer Boulder Wind Power engaged Molycorp to be its preferred supplier of rare earths and/or alloys for wind turbine generators.

However, the federal government doesn’t want to take any chances. According to a recent report, 25% of the world’s rare-earth supply will come from China by 2015, as demand for the neodymium and dysprosium necessary for the manufacture of magnets for wind turbines will climb at a pace of 7% to 9% per year through 2015.

To avoid dependence on China, the new initiative will focus on tackling the challenges across the entire rare-earth spectrum, including mineral processing, manufacturing, efficiency, substitution and recycling.

"We must ensure America's entrepreneurs and manufacturers continue to have access to these critical materials so we can compete in the global energy economy," DOE Secretary Steven Chu said in a statement. "Our success will be crucial to ensuring we can continue producing the advanced energy technologies that will power our economy long into the future."

In order to encourage competition, the DOE will use the $120 million allotted to the new initiative to award grants to businesses, universities, national laboratories and nonprofits to develop proposals to address the key conflicts associated with maintaining adequate supplies of rare earths.